Oil fund investment would have enabled growth

The strong performance of Norway’s Oil Fund shows the scale of the opportunity which was missed as a result of successive UK Government’s determination to squander North Sea oil resources.

Had the UK followed Norway’s example in establishing an oil fund to manage North Sea oil and gas income, the UK would be far better placed to grow its way out of recession by funding capital investments.

Norway’s Government Pension Fund Global began in 1996 with an initial investment of around $300 million, but reports in today’s Financial Times (Monday 20 August) place its value at $600 billion. It now owns one percent of all equities across the globe.

Originally expected to last around 30 years, experts now believe the fund could last a century or more.

In 2010, Nobel Prize winning economist and former Chief Economist of the World Bank Josef Stiglitz stated that it was “imperative” that an oil fund be established after the UK had “squandered” North Sea oil resources.

“The speed and the scale with which Norway’s oil fund has grown shows just how big an opportunity successive UK Governments have let slip through their fingers.

“Had the oil and gas resources off our coasts been invested wisely, we would be far better placed to grow our way out of recession by funding capital investments.

“Investing in capital projects is perhaps the single most effective thing that could be done to get the economy growing again, which is why our calls for the Treasury to invest in shovel-ready projects have been backed so widely.

“While the Treasury may have denied itself the resource of an oil fund to fall back on, it is still imperative that George Osborne ends his stubborn obstruction and invests in infrastructure before the damage he is doing becomes irreparable.

“The Treasury may have failed in its responsibility to establish an oil fund, but it would be utter negligence if it now failed to invest in shovel-ready projects.

“Of course the growth of the Norwegian oil fund over a relatively short space of time shows that it is not too late for Scotland to get started with its own oil fund, but to do that we will need the normal powers of an independent country.”